TaxTMI 
TaxTMI 
2010 (7) TMI 821
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...., however, has confined its challenge only to the extent that the proceedings under Adhiniyam 1987 to remain suspended till enquiry is pending under the SICA, 1985 as per section 22 of the SICA, 1985. 5. The facts relevant for the present are that financial assistance of Rs. 25 lakhs was extended by the respondent to the petitioner to set up its industrial unit for manufacturing of dye intermediates at village Raipur Nayakhera, District Sehore, M. P., in the year 1995. By way of security several documents were executed including the indemnity bond in favour of the respondent by the petitioner. Petitioner Nos. 2 to 4 besides executing the security documents for and on behalf of petitioner No. 1 company also stood as guarantor in the personal capacity for the security of repayment of financial assistance extended in favour of the petitioner-company by way of executing indemnity bond whereby and whereunder the respondents were given right to enforce the terms thereof for the recovery of dues outstanding as an arrear of land revenue (paragraph 13 of the indemnity bond dated 21-4-1997). 6. It appears that the petitioner-company defaulted in repayment of financial assistance resulting ....
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.... of the SICA, 1985. 9. Learned counsel appearing for the respondents vehemently opposing the plea raised by the petitioner on the ground that it is as per the terms contained in the indemnity bond that the recovery proceedings were initiated against the petitioner as per the Adhiniyam, 1987 and the bar as stipulated under section 22 does not get attracted in such matters. Reliance is placed on the judgment in Dy. CTO v. Corromandal Pharmaceuticals [1997] 89 Comp. Cas. 1/ 14 SCL 154 (SC). 10. After hearing learned counsel for the parties the question which crops up for consideration is as to whether the Naib Tahsildar was justified in entertaining the proceeding under the Adhiniyam, 1987 for recovery of dues and outstanding against the company. Section 22 of the SICA, 1985, stipulates : "22. Suspension of legal proceedings, contracts, etc.-(1) Where in respect of an industrial company, an inquiry under section 16 is pending or any scheme referred to under section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Co....
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....tended by one year at a time so, however, that the total period shall not exceed seven years in the aggregate. (4) Any declaration made under sub-section (3) with respect to a sick industrial company shall have effect notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or any other law, the memorandum and articles of association of the company or any instrument having effect under the said Act or other law or any agreement or any decree or order of a court, tribunal, officer or other authority or of any submission, settlement or standing order and accordingly,- (a)any remedy for the enforcement of any right, privilege, obligation and liability suspended or modified by such declaration, and all proceedings relating thereto pending before any court, tribunal, officer or other authority shall remain stayed or be continued subject to such declaration ; and (b)on the declaration ceasing to have effect- (i)any right, privilege, obligation or liability so remaining suspended or modified, shall become revived and enforceable as if the declaration had never been made ; and (ii)any proceeding so remaining stayed shall be proceeded with, subject to the provisions o....
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....hall be deemed to have been commenced for the purposes of section 22 of the Act. This court dealt with this aspect of the matter in Real Value Appliances Ltd. v. Canara Bank [1998] 93 Comp. Cas. 26 ; [1998] 5 SCC 554 and held as under (page 37) : 'In our view, when section 16(1) says that the BIFR can conduct the inquiry "in such manner as it may deem fit", the said words are intended only to convey that a wide discretion is vested in the BIFR in regard to the procedure it may follow for conducting an inquiry under section 16(1) and nothing more. In fact once the reference is registered after scrutiny, it is, in our view, mandatory for the BIFR to conduct an inquiry. If one looks at the format of the reference as prescribed in the regulations, it will be clear that it contains more than fifty columns regarding extensive financial details of the company's assets, liabilities, etc. Indeed, it will be practically impossible for the BIFR to reject a reference outright without calling for information/documents or without hearing the company or other parties. Further, the Act is intended to revive and rehabilitate sick industries before they can be wound up under the Companies Act, 1956....